Too many complaints of additional service charge by restaurants, hotels

While asserting that pricing of the product covers both the goods and services component, the Ministry of consumer affairs said that the national consumer helpline has received many complaints regarding addition of service charge by restaurants and hotels in the bill without the consent of consumers.

“A component of service is inherent in the price of food and beverages offered by the restaurant or hotel. Pricing of the product thus covers both the goods and services component. There is no restriction on hotels or restaurants to set the prices at which they want to offer food or beverages to consumers,” said Piyush Goyal, the minister of consumer affairs in a written reply in the Lok Sabha on Wednesday.

At the pre-litigation stage, a consumer can lodge a complaint in the National Consumer Helpline. During 2019-20, a total of 658 complaints were filed regarding levy of service charge in National Consumer Helpline. For the year 2020-21 and 2021-22, 99 and 413 such complaints were filed respectively. All the complaints have been disposed of with either resolution provided by the concerned hotel or restaurant or with the advice to the consumer to approach consumer commission.

The minister in the reply said that the Central Consumer Protection Authority, taking cognizance of such complaints being received on National Consumer Helpline regarding levy of service charge by hotels and restaurants, has issued guidelines to prevent unfair trade practices and protection of consumer interest with regard to levy of service charge in hotels and restaurants on 4th July, 2022.

“The guidelines issued by CCPA stipulate that hotels and restaurants shall not add service charge automatically or by default in the food bill and have to clearly inform the consumer that service charge is voluntary, optional and at consumer’s discretion. These guidelines do not prohibit a consumer to pay tips to serving staff voluntarily,” said the reply.

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